Capabilities for Digital Platform Survival: Insights for... Capabilities for Digital Platform...

download Capabilities for Digital Platform Survival: Insights for... Capabilities for Digital Platform Survival

of 17

  • date post

    02-Jun-2020
  • Category

    Documents

  • view

    0
  • download

    0

Embed Size (px)

Transcript of Capabilities for Digital Platform Survival: Insights for... Capabilities for Digital Platform...

  • Capabilities for Digital Platform Survival

    Thirty Ninth International Conference on Information Systems, San Francisco 2018 1

    Capabilities for Digital Platform Survival: Insights from a Business-to-Business Digital

    Platform Completed Research Paper

    Michael Blaschke University of St.Gallen

    Institute of Information Management Müller-Friedberg-Strasse 8

    9000 St. Gallen, Switzerland michael.blaschke@unisg.ch

    Kazem Haki University of St.Gallen

    Institute of Information Management Müller-Friedberg-Strasse 8

    9000 St. Gallen, Switzerland kazem.haki@unisg.ch

    Stephan Aier

    University of St.Gallen Institute of Information Management

    Müller-Friedberg-Strasse 8 9000 St. Gallen, Switzerland

    stephan.aier@unisg.ch

    Robert Winter University of St.Gallen

    Institute of Information Management Müller-Friedberg-Strasse 8

    9000 St. Gallen, Switzerland robert.winter@unisg.ch

    Abstract

    A digital platform is viewed as the central point of gravity within its business ecosystem to facilitate value co-creation processes among its business ecosystem’s constituent actors. Considering the specificities of business ecosystems, we spotlight digital platform survival to investigate digital platforms’ sustained viability and growth. We posit that digital platform survival is contingent on its owner’s capabilities to ensure efficient and effective value co-creation processes among the digital platform’s constituent actors on both service system and service ecosystem levels. Building on the inherent control- generativity dualism of digital platforms and through investigating an established business-to-business digital platform, we identify four key capabilities for digital platform survival. While two capabilities (system orchestration and system reformation) reflect the owner’s ability to facilitate value co-creation processes on the service system level, the other two capabilities (ecosystem preservation and ecosystem diversification) reflect the owner’s ability to facilitate value co-creation processes on the service ecosystem level.

    Keywords: Digital platform, Digital ecosystem, Capability, Value co-creation, Digital platform survival, Single case study

    Introduction

    “Understanding of what causes a [digital] platform to succeed while others fail is still lacking. […] Studying the conditions in which some [digital] platforms thrive and grow while others fail is of value to both research and practice.” (De Reuver et al. 2017, p. 7).

    Apple, Alphabet, Microsoft, and Amazon have become one of the world’s most valuable companies (Statista 2017). Each is marked by a digital platform (e.g., De Reuver et al. 2017; Parker et al. 2017; Tiwana 2015)—

  • Capabilities for Digital Platform Survival

    Thirty Ninth International Conference on Information Systems, San Francisco 2018 2

    a building block, providing an essential function to a technological system, which acts as a foundation upon which other firms can develop complementary products, technologies, or services (Gawer 2011, p. 2). While few digital platforms thrive and grow, such as those of Apple (iOS), Alphabet (Android), Microsoft (Windows), or Amazon.com, many others fail to sustain in the long run. A prominent example of digital platform failure is Microsoft’s operating system Windows Phone. In 2013, Microsoft acquired Nokia’s Devices and Services division in a last attempt to leverage its extant mobile operating system. In 2017, Microsoft discontinued its support for Windows Phone (Briegleb 2017) with only 0.2 percent of all smart- phones running the Windows Phone operating system (Gartner 2017).

    Notwithstanding existing investigations on digital platforms’ evolution (Tiwana et al. 2010), business models (Giessmann and Legner 2016), innovation (Lyytinen et al. 2016), and competition (Tiwana 2015), a thorough understanding of what delineates a digital platform to survive and grow in the long run while others fail is still lacking (De Reuver et al. 2017, p. 7). To bridge this void, we investigate digital platform survival that reflects a digital platform’s state of sustained viability and growth (Josefy et al. 2017). Seeking to leverage digital platform survival, we particularly focus on pivotal capabilities that digital platform owners should possess—in relation to third-party communities and end user organizations. In this study, capability refers to the ability to repeatedly perform or achieve certain actions or outcomes that relate either directly or indirectly to a firm’s capacity for creating value (Grant 1999). For instance, a hospital’s capability in cardiovascular surgery is dependent on integrating the specialist knowledge of surgeons, anaesthetist, radiologist, operating-room nurses, and several types of technicians. Similarly, a digital platform owner’s capability in leveraging digital platform survival is dependent on integrating the owner’s, partners’, end user organizations’, and further stakeholders’ resources.

    Our quest for such capabilities rests on the premise that third-party communities (e.g., digital platform partners) extend traditional notions of value creation in firms. That is, while digital platform owners must continue to carefully manage the value they create internally, they must as carefully obtain capabilities to manage value creation that occurs externally (Parker et al. 2017). In distinction to mere outsourcing, owners grant access to the digital platform and relinquish product specifications to little-known, loosely-coupled third parties. Thereby, owners seek to attract an entire ecosystem containing third parties, which are capable of serving as development, sales-force, or consulting partners of the respective digital platform to provide requested services by end users (e.g., Ceccagnoli et al. 2012; Sarker et al. 2012). Thus, value is co- created by the owner, partner, and end user organizations. To account for these multiple, varied, and interdependent actors co-creating value in ecosystems (Ceccagnoli et al. 2012; Han et al. 2012; Sarker et al. 2012), we employ the value co-creation concept (Galvagno and Dalli 2014; Payne et al. 2008; Ranjan and Read 2016). Specifically, we draw our conceptual foundation on value co-creation’s core constructs from a service-dominant logic perspective in service science (Vargo and Lusch 2016a; Vargo and Lusch 2016b; Vargo and Lusch 2017; Wilden et al. 2017). Building on the value co-creation concept to study digital platform survival, we posit that value co-creation plays a pivotal role in leveraging digital platform survival.

    Overall, this research draws on, integrates in, and extends digital platform research (targeted literature) (Constantinides et al. 2018; Reuver et al. 2017). We specifically study digital platforms’ survival (phenomenon of interest) through the vantage point of value co-creation (employed theoretical lens) (Ranjan and Read 2016). To answer the research question “Which digital platform capabilities account for value co-creation to leverage digital platform survival?”, we study an established business-to-business (B2B) digital platform for enterprise software—one that has thrived globally since its launch in 2012. To this end, we provide detailed empirical account and analysis of a digital platform’s key capabilities (namely, system orchestration, ecosystem preservation, system reformation, and ecosystem diversification) to leverage digital platform survival (resulted insights).

    The study’s remainder is structured as follows. The following section synthesizes digital platform literature as the research background and value co-creation literature as the conceptual foundation. After explicating the employed research method, we present the resulted insights. The last section discusses the capabilities for digital platform survival and concludes.

    Research Background and Conceptual Foundations

    In this section, we first provide an overview of digital platform research. We then introduce the value co- creation concept as the study’s conceptual foundation in investigating digital platform survival.

  • Capabilities for Digital Platform Survival

    Thirty Ninth International Conference on Information Systems, San Francisco 2018 3

    Research Background: Digital Platforms

    The use of the term platform has proliferated in both IS and management research (De Reuver et al. 2017; Thomas et al. 2014). To organize prevalent discourses, we follow Thomas et al.’s (2014) synthesis of platform research streams. They represent a continuum from predominantly firm-internal platforms— comprising organizational platforms (e.g., consulting, outsourcing) and product family platforms (e.g., machine tools, consumer electronics)—to increasingly complex firm-external platforms—comprising market intermediary platforms (e.g., credit cards, telecoms, online auctions) and platform ecosystems (e.g., Internet). In the context of digital platforms, contemporary organizations interactively and jointly operate in actor-to-actor networks comprising an owner, partners, end users, subcontractors, regulators, and other stakeholders that extend the operations of an organization beyond its organizational boundaries (Friend and Malshe 2016; Parker et al. 2017). Residing in the firm-external end of platform research (Ceccagnoli et al. 2012; De Reuver et al. 2017; Parker et al. 2017; Sarker et al. 2012; Tiwana 2015), we ground our research on the premise that digital platform survival is contingent on the availability and contribution of a critical mass